Europe at a Crosswords

Tom Donelson
November 25, 2011 Posted by Tom Donelson tomdonelson@aol.com

The Failing Euro

We are witnessing the end of Europe as we know it and the change may not be pleasant.  Europe is now at a crossroads with two paths to consider, neither ending happily.  The first is simply to end the Euro experience.  The second is a Germany dominated Economic Europe combined with more bureaucratic control over individual countries for the only way the Euro is to work the way the founders want it is simply for the European Union take over the economic decisions of countries involved.

The Euro was designed to facilitate tighter economic integration and force a converging of various European nations.  But, trying to economically unite nations as diverse as Greece with the thrifty Germans has proven a failure.  As the past decade has shown, the only way this would have worked is if there was a more powerful central government running Europe and thus the rub.  The idea of a strong central European Union run from Brussels would have met a less democratic Europe as the present European Union has shown.  Nor necessarily would a stronger economic Europe be the result.

If nothing else, the European Union has hardly been willing to listen to voters.  If a nation rejected the Euro and inclusion into the European Union, the European elites have simply forced the nation to keep voting until they got the result desired and the recent Greece crisis has shown, the Greeks were told either you do what you are told or else you go under.  The Greeks have been profligate with their economic policy and Greece was at a point of no return as their debt levels were too much to handle but when the Greece government wanted a referendum on the program they were asked to carry out, the European masters said no and forced the government to collapse.  There was and is still no doubt that Greece needs massive reforms but without the support of those governed, the reforms are doomed.  Another problem with the various austerity programs is that while budget cuts and wage cuts are enacted, there is very little incentives for those with money to stay as massive tax increases are enacted as well.  With no tax reduction on investments or the producer class, there is very growth oriented policy and with Greece tied to the Euro, the average Greece will continue to see their daily income declining.

The problem originally was that the Euro allowed reckless nations like Greece to borrow money at lower interest rates but there was no option to devalue their own currency to adjust and as National Review Online Ramesh Ponnuru noted, “The economies of France and Germany are so large that a policy designed for the euro zone as a whole would inevitably be a better fit for their needs than for those of the countries on the zone’s periphery.  But the European Central Bank has given Germany’s economy even more weight than its size alone would suggest.  The Barclays Capital report found that European monetary policy since 1999 “has tended to correspond more closely with German economic conditions than for the euro area as a whole.”

Ramesh Ponnuru added that a looser monetary policy could lead to inflation in Germany and France whereas those weaker nations will have to see lower real wages if there is no additional expansion of monetary policy by the European Central Bank.  Ponnuru asked if the various weaker nations would have been better if they would have been allowed to devalue their currencies and as he theorizes, “Taxpayers wouldn’t be facing pleas for bailouts.”

Ramesh Pnnuru

The real issue is that for past decades, the European elites have forced an experiment upon much of Europe and they often treated opposition as “spasms of irrationality” as Ponnuru noted.  The goal was European unity but now European unity is at risk as many German taxpayers are wondering it is worth the effort to subsidize their more reckless neighbors and others are balking at the conditions imposed.  The elites are now going for more integration but as Ponnuru, maybe it is time for less integration as he observed that maybe Germany and France along with the other more wealthy northern neighbors creating their own currency and allowing their southern neighbors to slip away Ponnuru conclude, “The wiser course is to ditch the euro. The countries in the most trouble can’t leave it because their first whisper would trigger widespread bank runs.  If Germany and like-minded nations want to avoid either inflation or bailouts, they themselves should leave en masse — creating a new northern European currency covering a more economically cohesive area.  The remaining euro countries could then adopt a realistic exchange rate in relation to this new currency.”

That is the rub, ditch the Euro and there is the possibility of bank runs and more economic dislocation.  The other option is a less democratic Europe dominated by a resurgent Germany and backed by a increasing more powerful bureaucratic European union.  As a recent report in Daily Express reported, “Britain will soon be forced to scrap the pound and join the euro, one of Germany’s most senior figures said yesterday.  In a chilling threat to UK sovereignty, German finance minister Wolfgang Schauble predicted that all Europe would one day use the single currency.  ‘Will happen perhaps faster than some in the British Isles currently believe,’ he said.  His sinister warning followed the emergence of a secret German plan to build a powerful new economic government for the Eurozone and block an EU referendum in Britain.”

The European elites want to eliminate nationalism and control all aspects and an independent Great Britain represents a threat to their own control.  From this point, Europe has very few good options but Europe may be forced to a more decentralized union which based on each nation determining their own fate, unified by free exchanges of goods across the border.  It will mean that Greeks will still be economically stupid and force to suffer the consequences of their decisions but it won’t threaten the whole of Europe.  It could also mean a freer Europe.

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5 Responses to Europe at a Crosswords

  1. clau2002 on November 25, 2011 at 9:47 am

    Is it what you really think or is it just electoral propaganda?Because if this is what you think,…well…no one in Europe could have had believed how high is the level of ignorance in the USA.If this is the level of politicians?…imagine the level of poor John Doe down on the street!!!!

    • Tom Donelson on November 25, 2011 at 7:55 pm

      I suspect that European ignorance of America is even more pronounce. Explain to me exactly where I am wrong. Italy is in trouble, Greece has essentially defaulted, Spain is not far behind and now France financial system may be in jeopardy. Just read European own newspaper to get some of these facts. The Euro is in trouble and that is a fact.

  2. Ladybard on November 29, 2011 at 3:11 am

    It is tragically true that Europeans – Italy excepted – see the USA through the prism of ignorance, misunderstanding and an anti-American campaign subtly waged by many who profit from America’s economic power, but are still seething at American Independence.

    The USA was the inferred model for the EU – but a “EUSSR”was the real goal and structure, with a feudalistic two class system. It is no surprise that Brussels is nicknamed “Versailles” by those who enjoy its privileges the most.

    Ireland was bait for the East European countries, with populations accustomed to serfdom and socialist-communist oppression. The Celtic Tiger was driven by hefty loans to Rothschild own banks, which then insisted that the Irish taxpayer pay the freight, thereby opening the door to the IMF and a fire sale of Ireland’s best assets. Win win for the banks. One way of obtaining 50% of the world’s assets. Now it’s revealed that there was no real generation of business – the “movers and shakers” were all heavily in debt. Again, the loans were largely used to “throw up” massive housing estates, where asylum seekers, and imported workers were housed, receiving favorable rates on communications and energy from semi State bodies while returned Irish emigrees were rooked of money, time, energy and good will. The worst result is the inertia, lethergy and indifference to any idea, thought or concept that does not come down from Brussels, and the cynical greed and elitism permeating Ireland like a toxic venom.

  3. clau2002 on December 1, 2011 at 7:36 am

    When an educational system is based on “fast facts”&”short version”of everything,like the US educational system is,the only possible result is a large percentage of the population able to write articles and comments like the ones above.In order for you to get the meaning of my previous comment,you should actually study thoroughly the economic geography and history of Europe(no short version)and read the founding documents of the European Union(they are available in English).All this should take you about four months of intense study.At this point you will start to understand what this is all about.As Socrates used to say in ancient times…”The day when an ignorant idiot starts to doubt his/her superior understanding and arrogant attitude,is the day when the said ignorant idiot starts do become intelligent”!regards from Europe.

  4. Tom Donelson on December 1, 2011 at 8:13 am

    Cute, funny and totally irrevelant as you once again fail to tell me where I got it wrong. In the past week, there have been talked of Germany and France dictating to other nations their budget to get aid or something to that effect,. Then there is the Federal Reserve printing dollars like crazy to prop up the EU to give the Germans and France more time to put a plan together.

    The Euro is in jeopardy, so tell me where I got it wrong. As I mention in my piece, Europe is on verge of possible collapse and all you have to do is turn on any busines channel and have experts repeat what I am saying.

    I suspect, hell, I know that I can find Europeans who agree with my assestment. Daniel Hannon of European parliament have made similar statements and he has more than footnoted enough of his materials. I will add Czech President Vaclav Klaus and other Central Europeans have made similar arguments on the condition of Europe to me and Ramesh Ponnuru, who I have quoted. They maybe an minority but their position is looking like stronger.

    “So when you start doubting your superior understanding and arrogance, maybe you might become intelligent.” Which brings me an interesting question, every liberal that response to me and others on this blog can’t seem to resist insulting remarks as oppose to facts or dealing with issues at hand. Besides, it is not I who should be doubting his superior understanding and arrogance.

    In the end,my points stand. Euro is in trouble, the European welfare state is imploding, Many economic decisions over the past several years have been moving toward Brussel and there are many European concern over the power shifting away from individual countries to bureaucrats. Europe is in trouble, dealing with a major financial crisis and so far you ignored that argument. Reading the European constitution or whatever doesn’t change that fact! Regards from the United States.

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